AIM-listed pharma firm defaults on council loan

Liverpool City Council (LCC) has been accused of aggression by a pharmaceutical company which has been forced into administration after failing to repay a £2m loan on time.
Administrators were last week called into drug discovery and development firm Redx after the deadline for repayment of the loan – made by the council in 2012 – passed.
The company says that the council has rejected an offer of £1m with repayment of the rest of the loan after a proposed short grace period.

Redx chairman Iain Ross said: “The timing of this action by LCC and its advisers FRP is extremely unfortunate and quite baffling considering our efforts to have face to face discussions, including earlier today, the immediate offer of a payment plan and our latest proposal to make an immediate £1m payment in return for a short grace period.
“The board and its advisers felt consistently confident that we could have found the appropriate solution within a short period and can’t quite fathom why a creditor with whom we have had a good relationship for over five years is taking such an aggressive stance when they know, and have been provided with the evidence, that the Company is making excellent progress on all fronts.”

The loan was originally made in June 2012 at a rate of interest of 12% and was due to be repaid at the maturity date of 31 March 2017, according to a statement by Redx.
Discussions on a renegotiation of the arrangement between the council and Redx broke down, with FRP Advisory appointed as administrators to the company.
Trading in the company’s shares on the AIM market of the London Stock Exchange has been suspended.

A spokesman for the council said that, despite the council agreeing previously to extend the repayment deadline by two years, Redx has “shown no willingness to make any repayment of any size”, despite it raising substantial funds from shareholders over the past few years.

The council said that no contact was made by Redx in the run up to the maturity date on the loan and that it had been forced to make formal demand of the debt.
Liverpool mayor Joe Anderson said: “This is a highly regrettable situation but Redx has been given more than two years to put its house in order and establish a way to repay this investment loan.
“Even at the 11th hour the city council was willing to work on a repayment schedule but it is now clear Redx has no intention to work with us in any meaningful way.

“This investment loan was given in good faith and we have a duty to the public to ensure their money, especially during such financial difficulties, is protected.”

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